Bubble up or trickle down?

November 13, 1980

There has been much discussion regarding the "trickle down” theory of economic benefit vs. the “bubble up” theory. Those wishing to have benefits legislated for the workers claim that their increased wealth will bubble up to others. Those wishing to legislate benefits for companies explain that these benefits will trickle down to others.

It must be recognized that all such schemes do nothing more than redistribute wealth. One man benefits at the expense of another, When this transfer act is complete, other people are no poorer and no richer, nor will they be so because of the transfer itself.

If the transfer leads to less incentives, or to a distortion in natural supply and demand, then production will be retarded and society as a whole will suffer from the reduction in production.

The only benefit to other men would come from an increase in production of wealth. This comes only through an increase in productive effort, not from a transfer of existing wealth.